Pentagon shifts tactics on sequestration

The Pentagon did an about-face on sequestration this week, taking concrete steps — including a hiring freeze and a delay in awarding some contract awards — more than six weeks before the across-the-board spending cuts are scheduled to hit.

The moves announced by Defense Secretary Leon Panetta were a significant shift for the Defense Department compared to the approach ahead of the initial Jan. 2 sequestration deadline, when Pentagon officials did not officially start planning for the cuts until December.

The “fiscal cliff” deal passed by Congress provided the Pentagon a two-month reprieve with a March 1 deadline, but the defense budget could still see a $45 billion reduction in 2013 that would have to be implemented over just seven months.

The Pentagon’s new tactics for “sequestration 2.0” — as well as the potential government shutdown at the end of the March — could help defense advocates insert Pentagon spending back into the conversation during the upcoming deficit debate, after defense was an afterthought during the December “fiscal cliff” negotiations.

But the Pentagon’s moves could also give ammunition to defense spending critics to argue that sequestration isn’t so bad after all.

“Much of the public debate about the defense sequester before January had just been lots of talk and hyperbole, and not a lot of real concrete specific things that could happen,” said Todd Harrison, a defense budget analyst at the Center for Strategic and Budgetary Assessments, who said that the new steps could shift the debate when Congress sees furloughs and a hiring freeze in the pipeline.

“[But] it also has the potential to give more argument to the side of cutting defense,” Harrison said. “Look at some of the things outlined in the memo, like cutting back on non-essential travel. Why were we spending money on non-essential travel? There are some things in there where people can say, ‘Well the Pentagon should have been doing this anyway.’ ”

Defense analysts welcomed the steps the Defense Department was taking, saying they would lessen the impact of the "meat axe" cuts were they to actually take effect.

But the different strategy was also tinged with politics, said Mackenzie Eaglen, an analyst at the conservative-leaning American Enterprise Institute.

For months in 2012, the Pentagon insisted it was not planning for sequestration on instructions from the Office of Management and Budget (OMB), which ultimately gave the planning the green light after the November elections.

“The Pentagon should have been planning at this detailed level for months now, but there was a reason that they did not, and it’s called politics,” Eaglen said.

“OMB never sent down an adequate level of guidance to start this level of planning, which was a political decision,” Eaglen said. “Secretary Panetta knows that once you start this type of planning, it opens the door for a lot of unintended consequences, to include the use of [Worker Adjustment and Retraining] WARN Act notices by contractors, to members of Congress seeing sequestration as more acceptable, not less.”

Panetta told reporters on Thursday that the Pentagon was taking the new fiscal steps now because of the triple threat facing the government in March: the sequester cuts, the expiring continuing resolution and the possibility of the government defaulting on its debt.

“We are seeing the formation of what I would call a perfect storm of budget uncertainty,” Panetta said. “Looking at all three of those, we have no idea what the hell's going to happen.”

The Defense secretary on Thursday ordered several actions to be taken immediately. Those included a civilian hiring freeze, terminating temporary workers, curtailing non-essential travel and conferences, and delaying and cancelling some maintenance funding.

Harrison said he believed that the end game of the December fiscal-cliff negotiations were a “wake-up call” for the Pentagon.

In the months before the November elections, everyone from defense industry lobbyists to President Obama said that sequestration would simply not happen.

Both Democrats and Republicans opposed the across-the-board nature of the cuts, and the conventional wisdom held that Congress would ultimately do away with sequestration, which was designed to be a forcing mechanism.

But the way the fiscal-cliff negotiations played out, the debate was all about tax rates, and a short two-month sequester delay was only added at the 11th hour.

Now sequester is coupled with the need for a debt-limit increase, which could again overshadow the across-the-board cuts.

“Defense was always subordinate in the fiscal-cliff deal by design,” said Eaglen. “Kicking sequester into the debt-ceiling fight, and possibly into the expiration-of-the-CR fight, ensures that it continues to be a subordinate issue.”

Some analysts are warning, too, that sequester could be more likely now, because there won’t be as much in tax revenues to offset the cuts.

In an interview Monday previewing the debt-limit fight, House Speaker John Boehner (R-Ohio) said that sequestration was the best leverage for Republicans, and said he had GOP support to let the cuts happen.

His comments irked some hawkish GOP lawmakers, although Sen. Lindsey Graham (R-S.C.) also said in December he was willing to let sequestration go through if the alternative meant a bad deal on entitlements and taxes.

Panetta said Thursday that pessimism over the odds Congress can reach a deal was part of the decision to take action now.

“I thought last year that sequestration was so nuts that there wasn't a chance that it would happen and was told frankly — there was not a member of Congress that I talked to that didn't think that sequestration was the wrong thing and that it shouldn't happen,” Panetta said.

“I think that there's an attitude that governing isn't necessarily good politics, that gridlock and confrontation is good politics,” he added. “And I think we pay a price for that. And that's what's happening.”